Carola Binder,
Quantitative Ease: The Future is Uncertain, but So Is the Past. In many macroeconomic models, inflation perceptions
should be nearly perfect. After all, inflation statistics are publicly available,
and anyone should be able to access them. The Federal Reserve commissioned the
Michigan Survey of Consumers Research Center to survey consumers about their
perceptions of inflation over the past year and over the past 5- to 10-years,
using analogous wording to the questions about inflation expectations. Surprisingly, consumers seem
just as uncertain about past inflation, or even more so, as about future
inflation.
Lawrence H.
Summers, NYT: It’s Time for a Reset. We need to
redirect the global economic dialogue to the promotion of “responsible
nationalism” rather than on international integration for its own sake.
A classic example of a misguided initiative is the effort to promote a
bilateral investment treaty between the United States and China. Even in the
unlikely event that such a treaty could be negotiated, its effect would be to
trade a reduction in America’s ability to control the behavior of Chinese
companies in the United States for increased security for American global
companies when they locate production facilities or otherwise invest in China.
From the point of view of a typical middle-class American voter, the deal is
lose-lose.
David Autor et
al., NBER: Foreign Competition and Domestic Innovation: Evidence from U.S.
Patents. In this paper we empirically
examine how rising import competition from China has affected U.S. innovation.
We confront two empirical challenges in assessing the impact. We map all U.S.
utility patents granted by March 2013 to firm-level data using a novel
internet-based matching algorithm that corrects for a preponderance of false
negatives when using firm names alone. And we contend with the fact that
patenting is highly concentrated in certain product categories and that this
concentration has been shifting over time. Accounting for secular trends in
innovative activities, we find that the impact of the change in import exposure on the change in
patents produced is strongly negative. It remains so once we add an
extensive set of further industry- and firm-level controls. Rising import
exposure also reduces global employment, global sales, and global R&D
expenditure at the firm level. It would appear that a simple mechanism in which
greater foreign competition induces U.S. manufacturing firms to contract their
operations along multiple margins of activity goes a long way toward explaining
the response of U.S. innovation to the China trade shock.
Eduardo Porter,
NYT: A Dilemma for Humanity: Stark Inequality or Total War. Mr. Obama has led the most progressive administration
since Lyndon B. Johnson’s half a century ago, raising taxes on the rich to
expand the safety net for the less fortunate. Still, by the White House’s own
account, eight years of trench warfare in Washington trimmed the top
1-percenters’ share, after taxes and transfers, to only 15.4 percent, from 16.6
percent of the nation’s income. So what does this leave us with? Another world
war, with or without thermonuclear weapons? Let’s hope not. State collapse
looks highly unlikely outside of some bits of sub-Saharan Africa. Revolution?
Little chance, given the absence of any powerful ideological challenge to
capitalism. “The world of
the future is likely to be quite stable and have very high inequality,” Mr.
Scheidel told me. Maybe we should just learn to stop worrying and love it.
David Card, Ana
Rute Cardoso, Patrick Kline, Microeconomic insights: The gender wage gap: how
firms influence women’s pay relative to men. Employers’ pay policies can contribute to the gender wage gap if women
are less likely to work at high-paying firms or if women negotiate worse wage
bargains then men. Analysing data from Portugal’s labour market, this research
finds that differences
among firms can explain up to 20% of the gender wage gap. Women tend to be
employed at less productive firms that offer lower wages to their employees.
Moreover, when women are hired by better-paying firms, their wages rise less
than men, possibly because they are less effective negotiators. These findings
call for renewed attention to equal pay and fair hiring laws.
Robert French,
Philip Oreopoulos, VOX: When behavioural economics meets randomised control
trials: Examples from Canadian public policy. Behavioural economics has been playing an increasingly important role
in public policy the world over, and Canada is no exception. This column
outlines the steps Canada is taking towards incorporating insights from the
literature into its policies. It also highlights the emphasis that many agencies in Canada are placing
on testing their prospective behavioural interventions through randomised
control trials.
Deborah M. Gordon,
OECD: Ants, algorithms and complexity without management. The process that generates simple interactions from
colony behavior is what computer scientists call a distributed algorithm. No
single unit, such as an ant or a router in a data network, knows what all the
others are doing and tells them what to do. Instead, interactions between each
unit and its local connections add up to the desired outcome. The
correspondences between the regulation of collective behaviour and the changing
conditions in which it operates might provide insight, and even inspire
thinking about policy, in human social systems.
For ants or
neurons, the network has no content. Studying natural systems can show us how
the rhythm of local interactions creates patterns in the behaviour and
development of large groups, and how such feedback evolves in response to a
changing world.
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